The BSE Power index hit a 10-year high, ending up 3.8% at 3,192 after hitting an intraday high of 3,208.6.
Tata Power surged the most among utility companies, ending up nearly 9%, followed by NTPC, Power Grid, BHEL, Torrent Power, Adani Power, and Siemens, which rose 2-7%. Power Grid and Torrent Power hit all-time highs.
Why Energy and Power Stocks are Running?
Energy stocks are in boom amid news around the Electricity Amendment Bill 2021 that could be a game-changer, along with elevated energy prices and increasing power demand particularly in China and the European region
The proposed Electricity Amendment Bill 2021 is aimed at reforming the sector. The bill seeks to de-license power distribution, reduce entry barriers for private players, which would ultimately enable consumers to choose from multiple providers.
What is Electricity Amendment Bill 2021?
The Bill proposes certain amendments to the Electricity Act, 2003.
1. The amendments seek to de-license power distribution, allowing private sector players to enter the sector
2. The Bill also provides for certain penalties for non-compliance by licensees in meeting Renewable Purchase Obligation (RPO).
3. It mandates that all electricity distribution licensees should purchase or produce a minimum specified quantity from renewable energy sources as a percentage of their total electricity consumption
Experts’ recommendation on the power and energy stocks to buy
Top Picks – NTPC, Power Grid, Tata Power, IEX
World’s largest electricity consumer China is facing a power shortage amid tight coal supplies and strict emission standards. Following that report, India’s energy and power stocks are witnessing strong buying traction.
Tata Power is a potential candidate for inclusion in the MSCI Standard index as part of the semi-annual review of the index in November. If the stock rises above ₹170, it will become eligible for the November inclusion. That could lead to an inflow of $150 million into the stock, said Edelweiss Alternative Research.
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